It is perhaps understandable that some people would hold such a position because it seems obvious that millions of people work either directly or indirectly for companies that derive a significant portion of their income from military contracts. Were those contracts to end, one might imagine many of those people becoming unemployed and many businesses simply closing up forever.
In essence, this is a very cold, utilitarian argument because it justifies the existence of war as in institution in order to maintain some desirable end (employment, a strong economy) despite the possibility that an actual war may break out and real people may die. There is no effort to defend war itself in any fashion. War is, rather, just an unfortunate consequence of other objectives - sometimes in order to get things we want, we have to accept things we don't want.
That this argument is problematic is made evident by the fact that hardly anyone actually tries to make it openly. It is a defect of some utilitarian positions that they can be used to coldly defend apparently immoral actions in the interest of achieving some presumably greater good.
The argument that war is necessary to keep the economy going is often put forth as a criticism by Marxists who have long denounced capitalism for encouraging conflict and war among nations. Marxists have also argued that as the ability of capitalists to exploit domestic markets declines, they will seek other markets elsewhere - and capture them by force, if necessary. Although historically war has often been a means of obtaining raw resources, it could in the future be a means to ensure that there would be labor to produce new goods and markets to purchase those goods as well.
Many capitalists have, however, argued just the opposite: capitalism and free markets are the best guarantors of peace because war, while good for the defense industry, is so bad for just about every other industry. A number of studies have tended to refute the Marxist arguments, revealing that while economic factors can play a role in wars, other factors like political ideology, legal claims, and technological change play a larger role.
One defect in the economic argument for war is that it isn't obvious that war is the only means to achieving the desired end. Surely there are other immediate goals, like space exploration or scientific development, which could be used to replace the military industries. Perhaps switching from machines of war to machines of discovery would be painful in the short term, but the long-range consequences would surely be advantageous for all concerned. Thus, perhaps the argument isn't utilitarian enough - it sacrifices the long-term for the sake of short-term gains.
Another defect is that the economic argument neatly avoids the question of whether the current economic structure is actually worth preserving. If the only way for the current system to be retained is to also retain the potential for occasional wars, then perhaps we should find some other economic system which results in less violence. The economic argument simply assumes that the preservation of the current system is, on balance, worth the cost of war without ever seriously considering the actual value of either; because of that, it cannot be taken too seriously as a justification either of war generally or of any wars in particular.
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